Voluntary Benefits Have Become Much More Mainstream

Employers’ growing interest in improving their workers’ financial wellness is driving the change, Prudential experts say.

During a webinar on Wednesday that Prudential hosted, “Voluntary Benefits: More Than Just a Gap Filler?,” Jessica Vanscavish, vice president, voluntary benefits at Prudential Group Insurance, said, “The marketplace has evolved. Products that were once not considered to be part of the core benefits plan have become much more mainstream as employers have come to understand the interrelationship that voluntary benefits can play in their employees’ financial wellness.”

As well, with “many employers moving to high deductible health plans [HPHP] with higher out-of-pocket expenses and deductibles, they have come to realize that voluntary expenses can play a gap filler and help workers with expenses that are not true medical expenses, such as helping a worker laid up from work with cancer who cannot drive and needs transportation to their chemotherapy sessions.”

Adam Gelman, vice president and business head for voluntary benefits at Prudential Group Insurance, added that if a person is out on disability, they will not be earning any money and disability insurance can pay not just for their medical costs but for other needs such as groceries and transportation.

If an employer decides to offer voluntary benefits, it will be far easier for them to work with a carrier that offers both core and voluntary benefits for ease of use, Vanscavish said. And, increasingly, they are looking for carriers that can also address financial wellness.

“We know many people are not saving a portion of their salary” either for retirement or an emergency, Vanscavish said. “A mere 40% have money set aside for an emergency, and it averages $400,” which underscores the need for a financial wellness program that includes education on budgeting, paying down debt and saving for an emergency, she said. “When employees face an emergency and don’t have the funds to help, they bring that stress to work, and when they are not financially prepared, it shows up in the workplace by lowering productivity and business results.”

While not all employers have come to realize the importance of their workforce’s holistic wellness, including financial wellness, “many are much more receptive” to understanding its importance, Vanscavish said. Part of the reason for this change is the brokerage community’s understanding of the importance of financial wellness, she said. Whereas in the past, brokers had only discussed products, they “now see the interplay between products and financial wellness and are becoming much more progressive recommenders,” she said.

To help employers understand which types of voluntary benefits might serve their employee base well, Prudential created a Prutection ScoreSM tool a few years ago, Vanscavish said. “It uses the clients’ own data on their health care and medical plan coverage along with benchmark data to figure out where their employees are most at risk, be they at different life stages or different demographics.”

Gelman added: “Employers can use the score to see where they have gaps and whether additional life or disability insurance” could improve their workforce’s outlook.

To prompt more employees to opt for voluntary benefits, it is important for employers to educate them about their advantages throughout the year—not just in a two-week open enrollment period, Vanscavish said. “We need to incent individuals to think about their benefits differently, not just about how much it will cost them and reduce their paycheck,” she said. “We need to use the other 12 months of the year to educate individuals about what options are available to them to suit their needs and gaps. That is where the opportunity is for employers, brokers and carriers to help employees think differently.”